Mortgages
Equity
Definition
The portion of a property's value that you own outright — the difference between the property's market value and the outstanding mortgage balance. Equity increases as you repay the mortgage and as the property rises in value. Negative equity occurs when the mortgage is larger than the property's value.
Why it matters
Your equity determines what you can do with the property financially — remortgage to a better rate, release cash for home improvements, or move up the ladder. Building equity (through repayments and price growth) is one of the main financial advantages of owning over renting.
Related terms
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